This example and many others are neatly presented in "The Signal and the Noise." Mr. Silver's breezy style makes even the most difficult statistical material accessible. What is more, his arguments and examples are painstakingly researched—the book has 56 pages of densely printed footnotes. That is not to say that one must always agree with Mr. Silver's conclusions, however.
As someone interested in financial markets, I found myself unconvinced by Mr. Silver's view that it should not be "all that challenging" to identify financial bubbles "before they burst." He suggests that the dot-com bubble that deflated in early 2000 was identifiable in advance. The price-earnings multiple for the market was enormously elevated at 44. Considerable empirical work, shown in the book, was adduced to point out that long-run (10- or 20-year) rates of return from stocks have generally been poor or negative when investors entered the market at such lofty valuation metrics.